State Street’s Global Investor Confidence Index (ICI) increased to 96.2 in July, up just 0.8 points from June’s revised reading of 95.4.
North America led the charge with a 1.3-point rise to 90.8, as well as a 0.7-point rise in Asia to 97.3.
Europe’s ICI reading, meanwhile, slumped 5.4 points to 99.5.
Nonetheless, the 0.8 increase continues to build on the upwards momentum observed in the last seven months, with the Global ICI reading at 95.8 in June, up 6.1 points from May’s revised reading of 89.7.
In last month’s Global ICI update, which saw its sixth consecutive rise, Marvin Loh, senior global macro strategist at State Street Global Markets, said the streak has only been replicated once – in 2009 – in the 25 years since the creation of the index.
Meanwhile, Asia has continued to exhibit significant volatility, dropping 2.6 points in April before rising 11.8 points in May, then dropping again in June by 4.3 points.
Mr Loh credited the small change in July’s Asia ICI reading to weak Chinese data, prompting the government to engage in more aggressive stimulus efforts.
“Investor confidence continued to recover towards neutral, as the Global ICI improved to its highest level since last fall,” he added.
“However, overall investor tone remained defensive, with all our global and regional indicators registering a sub-100 reading.”
An index reading of 100 is neutral, where investors are neither increasing nor decreasing their long-term allocations to risky assets. The index is based on the actual trades, as opposed to opinions, of institutional investors.
Mr Loh explained that North America saw the greatest improvement with respect to investor sentiment, rising to its highest level in nine months as recessionary risk faded while inflation surprised to the downside.
“In contrast, the Europe ICI fell back below 100, with deteriorating data spreading across the region’s largest economies.”
According to State Street, the Investor Confidence Index measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.
